Real estate investors who prefer buying, renting and selling condos got some good news from Congress as a much-anticipated bill sailed through the House. First time home buyers have long been fans of the FHA home loan and new condo rules help those who want or need an FHA to loan to more easily get financing. FHA loans are the most popular loan option for first timers due to the low down payment requirement, relaxed guidelines regarding financial gifts and no income limitations. However, current FHA rules require the condominium project to be approved by the Department of Housing and Urban Development before any FHA loan can be used to finance the purchase.

One of the tallest hurdles for an FHA approval is requiring the owner-occupancy of the units be at least 50%. That means of all the units in the project, at least half must be occupied by the owners. For a condominium project near a campus or a shopping district where rental demand is higher compared to other areas, if only 49 of 100 units are occupied by their owners, the FHA loan cannot be used. Yet this new legislation which passed the House by a 427-0 vote will relax the owner-occupancy requirement to 35%, a much lower figure. In addition, the new rules will allow for more commercial space in a project. Commercial space which occupies the lower levels of a condominium tower has become an increasingly popular amenity as occupants find they no longer have to drive to get groceries, shop or dine out.

Because the pool of buyers for an FHA condo is now deeper due to the relaxed occupancy restrictions, real estate investors can more easily sell their existing condo in a project where renters outnumber the owners. FHA loans have always been the loan of choice for first time home buyers and with these new guidelines they will become even more so.